Taxes are not a fun topic. Very few people think of ‘tax time’ as ‘fun time’, outside of that nice chunk of change so many of us have come to rely on after filing our taxes. But how much you get back at the end of the fiscal year depends on a lot of factors, and one of them is claiming your dependents on your taxes.
In other words, you’re telling the government that you spent money all year long supporting your kids, which means your expenses were considerably higher. But what does that mean for divorced parents around Lansing and mid-Michigan? Are both parents eligible to claim the Child Tax Credit? Let’s take a look…
Only one parent can claim children as dependents on their taxes.
According to the tax law here in the United States, because you and your ex aren’t filing jointly, only one of you can claim your child as a dependent on your taxes. However, you may remember that in 2018 the personal exemption was eliminated in favor of a higher standard deduction.
This means that claiming a dependent child no longer gives you an exemption to reduce your taxable income. Though claiming dependents can provide other tax breaks, like the child or dependent tax credits, the Earned Income Credit, and the Head of Household filing status.
Divorcing couples need to decide who claims the kids on tax forms
Because only one parent can claim their children as dependents on their taxes, the decision about who makes that claim is something the parents need to decide at the time of the divorce. Usually, the parent who has primary custody is the one who claims the kids as dependents, since they are the parent who incurred the most expenses associated with caring for a child.
However, sometimes parents agree to allow the other parent to claim the child as a dependent, even if they aren’t the primary caregiver. This might be because that parent has a smaller income, or receives a much smaller tax return during tax time. Either way, this decision needs to be made before taxes are filed for the year, because only the first filed return will be accepted. When parents cannot decide which of them gets to claim the kids, Attorney Brandy Thompson reminds us that we have to look to the Internal Revenue Code.
The IRS is very clear about how exceptions work on your taxes
The IRS says that the parent providing more than half the support for a dependent child gets to claim that child. However, the IRC also confirms that your divorce judge can also award the dependency exemption to one parent or the other. Experienced attorneys usually figure out ways to deal with tax issues.
Sometimes parents alternate taking exemptions in odd number years or even numbered years. In families where there are more than one child, sometimes the parents split the exemptions. Just like divorce law in Michigan is pretty complex, tax law is also difficult to navigate. Our divorce lawyers always recommend getting advice from both your divorce lawyer and your tax professional before finalizing your divorce case.
Discuss your choices for the future with your divorce attorney
When you get divorced, planning ahead for your financial future is one of the many important things you’ll need to do to be prepared. And that’s where a good family law attorney comes in. Here at The Kronzek Firm we help our clients with every aspect of their divorce, from figuring out custody and alimony, to child support and asset division.
But that’s not all. A good divorce attorney also makes sure you’re as well prepared as possible for the future. Which is why our experienced divorce attorneys work hard to ensure that every client we take on has all their questions answered, and is set up for success in every way possible, moving forward. Because your future is important to us, and your needs matter. So call 517 866 1000 right now to get help from the best with your divorce. We’ve helped hundreds of clients from all around Lansing for more than 25 years.